Problem Cost Estimation & CVP
ZetaEta, Inc is working on forecasting models for next year and needs a breakdown of the manufacturing overhead cost into the fixed and variable components. The following data on the OH cost and machine hours are available for the past six months.
Month	OH Cost	Machine Hours
June	$ 30,600	3,000
July	$ 25,750	2,030
August	$ 32,900	3,460
September	$ 31,100	3,100
October	$ 28,950	2,670
November	$ 27,400	2,360
Total	$ 176,700	16,620
Required:
1. Assume that ZetaEta uses the high-low method of analysis, determine the variable OH cost per machine hour and monthly fixed cost
Additional Sales & Cost information for ZetaEta
Sales Price		$ 35.10
Machine Hours Per unit		0.40
Direct Labor Hours Per unit		0.25
Direct labor cost per unit		$ 8.00
Direct Material cost per unit		$ 5.60
2. How many units do they need to sell to breakeven
3. How many units do they need to sell to earn a pre-tax profit of $97,500 in one month
4. Create a contribution margin income statement for the pre-tax profit of $97,500